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Arizona bill to block land sale to foreign governments doesn't include Saudi-leased land in La Paz County

By Howard Fischer
Capitol Media Services

PHOENIX -- Arizona lawmakers are moving to block the sale and lease of state lands to foreign governments and certain foreign corporations -- but not the one that has caused the concern in the first place.

HB 2376, approved by a 7-2 vote Thursday by the House Committee on Lands, Agriculture and Rural Affairs, spells out that none of the more than nine million acres owned by the state can end up in the hands of any foreign government or state-controlled enterprises, whether permanently or through a lease.

And the measure, which now goes to the full House, also would impose the same restrictions on any company headquartered in China, Cuba, Iran, North Korea, Russia, Syria or Venezuela. Ditto for any firm whose majority of shareholders are from those countries.

But Rep. Mariana Sandoval, D-Goodyear, pointed out that list does not include Saudi Arabia. And it is Fondomonte, a company controlled by Saudi interests, that is leasing 3,500 acres of state land in La Paz County and pumping huge quantities of groundwater to grow hay to feed cattle in Saudi Arabia, something that occurred after that water-starved country banned the growing of such crops there.

House Minority Leader Leo Biasiucci, R-Lake Havasu City, said there are talks going on among lawmakers whether to add that country, though nothing lawmakers do now could affect existing leases.

That, however, still did not satisfy Rep. Keith Seaman, D-Casa Grande.

"There are other countries as well who we may not want to own land in Arizona,'' he said. And Seaman specifically cited Afghanistan, Pakistan and Vietnam.

"It's a very good question,'' Biasiucci conceded. "Do we go through and start to pick and choose which countries might be against us or obviously we have histories with?''

The simpler solution, he said, was starting with those countries designated by the U.S. State Department as "state sponsors of terrorism'' and add to that "the ones that have been negatively impacting us constantly,'' meaning China and Russia.

And Biasiucci specifically questioned why Vietnam would be on a list of hostile countries.

"There's been no proof, in my opinion, of them doing anything that's been negatively impacting us,'' he said.

But Rep. Lydia Hernandez, D-Phoenix, said that's missing the point if at least part of the purpose of the legislation is to keep others from exploiting Arizona's limited water supply. In fact, she said, perhaps the measure should be expanded to keep companies based not just in other countries but hose from other states from buying or leasing state lands and thereby getting the water rights that come with the property.

"I mean, they are able to come in and do the exact same thing,'' Hernandez said.

Biasiucci showed no interest in expanding his legislation. He said, though, that the concerns are valid, specifically mentioning "hedge fund companies.''

"They're coming in and they're just looking for that water,'' Biasiucci. "They're just coming in and exploiting the resources and getting out.''

What might be better is more oversight of the deals being made by the state Land Department.

It was that agency that agreed to lease nearly 10,000 acres of state land near Vicksburg on the state's western edge for $25 an acre per year.

But the key is that the company gets to pump all the groundwater it could use as part of the lease. And that's because Arizona has lax regulations of water use in rural areas.
And there's something else.

The Land Department is charged by law with obtaining the highest return possible on the sale and lease of lands, with the proceeds benefiting some state functions, mainly public schools. And there appears to be nothing in statute that allows the agency to refuse an offer of money and instead allow the land to sit unused -- with no revenues.

Biasiucci said perhaps what's needed is legislation that creates a special committee to review the deals being made by the Land Department, presumably with some power to step in and stop some of the sales and leases being proposed.

Rep. Michael Carbone, R-Buckeye, said that deciding which land deals with foreign entities the state should approve could prove difficult.

He cited, for example, Taiwan Semiconductor Manufacturing Co. which purchased 1,128 acres of state land in north Phoenix where it wants to construct a $12 billion factory.

"When you have folks coming into our country to invest, that's good,'' Carbone said. "We need to bring manufacturing and stuff back to our country and get back to doing business with folks that have the same like-mindedness that we do, at least in the sense of not being adversarial, hostile.''

Sandoval, however, said she's not convinced that the measure will accomplish its true purpose of protecting Arizona water.

"It's not addressing the real issue on the groundwater supply being exploited by entities,'' she said in refusing to support the measure.